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Chinese official defends intervention: 'We must take action'

Expect the Chinese government not to sit still when its financial markets are falling apart.

If there is "systemic risk to the financial system, we must take action," China's Vice Finance Minister Zhu Guangyao told CNN in an exclusive interview Friday.

Zhu's comments came after two weeks of extreme turmoil in the global stock markets, particularly in China. The key Shanghai stock index has plunged more than 40% since June and erased all 2015 gains.

The backdrop is that the Chinese government has been especially active in the financial markets lately. Just two weeks ago, the country surprised the world by allowing the yuan to devalue. It propped up its markets by actually buying stocks a few months earlier. And this week, as its stock market tanked, the People's Bank of China cut its key rates for the fifth time in just nine months in an effort to keep money flowing in its financial system.

Zhu defended these actions, saying China was not alone in acting to support the financial markets. He cited similar actions by the U.S., U.K. and other countries.

He said the Chinese government had followed the "three T" principles: timely, temporary and targeted action.

"We thought we achieved the target, and timely intervention made panic basically be controlled," he said. "We really believe in ... time, the market will be back to the normal track."

Zhu was speaking with former Australian Prime Minister Kevin Rudd, who was guest hosting CNN International's Amanpour show.

He described "the new normal status" of the Chinese economy as "relative" high growth. He said there would be more emphasis on restructuring the economy and sustainable development, along with innovation-driven growth.

"We hope that in the next five years the Chinese economy will keep this potential growth rate at about 7-8%," Zhu said.